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Frequently asked questions about regional integration and Mercosur: 01. What is Mercosur? The Southern Common Market-MERCOSUR is a process of integration involving Brazil, Argentina, Paraguay, and Uruguay. It was established by the Treaty of Asuncion signed on March 26, 1991. It is now a Customs Union and its ultimate objective is to evolve into a Common Market. 02. Is Mercosur an economic agreement or a political project? Although the Treaty of Asuncion is of an eminently economic nature, its signing meant the fruition of a strategic regional project of a political nature as well. 03. What does Brazil gain from Mercosur? The creation of regional trade blocs has been a consolidating trend for decades. Mercosur represents an economic integration effort that aligns its members with this world trend as well as a design for political approximation in the Southern Cone. By joining Mercosur, Brazil acquires weight in international negotiations as, instead of negotiating individually, it does so as part of a bloc vis-à-vis other economic blocs. Moreover, Mercosur represents a potential market of 200 million people and an aggregate GDP of over US$1 trillion, which ranks it as one of the four major economies in the world, right after NAFTA, the European Union, and Japan. This explains why Mercosur is today one of the world’s major poles for attracting investment. 04. What is the current stage of regional integration? Since January 1, 1995, Mercosur stands at an integration stage known as Customs Union. 05. What is Mercosur's ultimate objective? The stated goal under the Treaty of Asuncion is the establishment of a Common Market consisting of Mercosur States Parties. 06. Do all States have the same rights and obligations? Neither the Treaty of Asuncion nor the Ouro Preto Protocol establishes any difference among the States Parties. 07. Can any member leave Mercosur? Certainly. The Treaty of Asuncion provides that a State Party may dissociate itself from the process by denouncing the Treaty (Article 21). 08. Is Mercosur a legal entity? Mercosur became a legal entity under international law with the signing of the Ouro Preto Protocol (Article 34). 09. What are Mercosur's main legal foundations? The main legal foundations of Mercosur are the Treaty of Asuncion and its protocols and additional or complementary instruments; the Decisions of the Common Market Council; the Resolutions of the Common Market Group; and the Guidelines of the Trade Commission. 10. How are decisions made at Mercosur? Mercosur decisions are made by consensus of all States Parties. Decisions are binding but cannot be directly enforced (they must be first internalized). 11. How are rules established by Mercosur Bodies implemented internally? Under the Ouro Preto Protocol the States Parties undertake the commitment to adopt all the necessary measures to ensure compliance with Mercosur rules within their respective territories (Article 38). As decision-making at Mercosur is intergovernmental (and not supranational, as is the case of the European Union), the rules approved must be incorporated into the legal system of the States Parties. Mercosur's Administrative Secretariat must be notified when this incorporation is accomplished. 12. How can one learn about the rules established by Mercosur Bodies? All Mercosur normative acts (decisions, resolutions, and guidelines) are posted in Spanish and Portuguese in Mercosur's Official Bulletin published by the Administrative Secretariat. 13. What is Mercosur's import in South America? Mercosur accounts for approximately 70 percent of South America's territory, 64 percent of its population, and 60 percent of its GDP. 14. What bodies make up Mercosur's institutional structure? The Ouro Preto Protocol endowed Mercosur with the following structure: (a) Common Market Council-CMC, Mercosur's highest instance, charged with conducting the integration policy; it consists of the Foreign and Finance Ministers of the member countries; (b) Common Market Group-GMC, Mercosur's executive body; it is coordinated by the Foreign Ministers of the member countries; (c) Mercosur Trade Commission-CMC, charged with advising the Common Market Group with respect to the application of common trade policy instruments; (d) Mercosur Joint Parliamentary Commission, which represents the Parliaments of Mercosur member countries; (e) Mercosur Economic and Social Consultative Forum, consisting of representatives of the economic and social sectors-a consultative body that makes recommendations to the GMC; and (f) Mercosur's Administrative Secretariat, which provides operational support and services to the other Mercosur bodies and has its permanent seat in Montevideo. 15. How is the Common Market Group structured? The Common Market Group is assisted in its activities by Working Subgroups, Specialized Meetings, and Ad Hoc Groups. Each one of these covers a specific topic, as follows: Working Subgroups-SGT
SGT 01 - Communications Specialized meetings: Science and Technology; Tourism; Public Information; Women's Issues; and Drug Prevention and Rehabilitation of Drug Addicts. Ad Hoc Groups: Institutional Aspects; Sugar; Foreign Relations; Government Procurement; Technical Cooperation Committee; Services Group; Social and Labor Affairs Commission. 16. How are conflicts between Mercosur members solved? Pursuant to the Ouro Preto Protocol, any dispute arising among States Parties about the interpretation and enforcement of or noncompliance with provisions of the Treaty of Asuncion, CMC decisions, GMC resolutions, and CCM guidelines will be subject to the settlement procedures established by the Brasilia Protocol approved on December 17, 1991. 17. How would conflicts between Mercosur members and third countries be solved? Any dispute arising between a Mercosur country and a third country will be submitted to the World Trade Organization-WTO. 18. How do Free Trade Zone, Customs Union, and Common Market differ from each other? A Free Trade Zone is a stage or form of integration in which all trade barriers between member countries are abolished. A Customs Union is a stage or form of integration in which, in addition to free trade between member countries, a Common External Tariff-CET is applied to trade with third countries. A Common Market is characterized by a Common External Tariff-CET and free trade in goods, as well as the free flow of production factors (capital and labor). 19. What is a tariff? It is the tax levied on merchandising entering a country. 20. What are ad valorem tariffs? They are taxes assessed on the basis of the value of the imported merchandise and not on the basis of volume, weight, kind, or quantity. It is generally used because it is transparent, nondiscriminatory, and consistent with the price changes. 21. What is a Common External Tariff-CET? It is a common tariff levied by a group of partner countries that apply the same tax rate to the entry of merchandise from third countries. 22. What is dumping It is the sale on, a foreign market, of a product at a price "below its fair price" or at a price considered to be lower than the product's sale price in the exporting country or the price charged on sales to third countries. In general, dumping is seen as an unfair trade practice, liable to harm manufacturers of similar products in the importing country. 23. What are subsidies? They are economic benefits granted by a government to producers of goods, often to reinforce their competitiveness. Subsidies can be direct (cash grants) or indirect (export credits at low interest, for instance). 24. What are the main trade defense instruments? The main mechanisms available to counter unfair trade practices are antidumping, countervailing rights, and safeguards. 25. What are countervailing rights? They are special rights incident on imports to offset the subsidy benefits granted producers and/or exporters in the exporting country. 26. What are safeguards? Safeguards are a trade defense instrument consisting in the application of temporary, selective measures such as tariffs or quantitative restrictions (quotas) to make more difficult the entry of imports that may threaten domestic production of similar goods. 27. What is a regime of exception? It is a mechanism that exempts from the Common External Tariff a limited number of goods from third countries. It is generally used by a country to protect certain sectors of its economy. 28. What is a regime of adaptation? It is a transitional mechanism created in 1994, whereby Mercosur member countries are allowed to establish a list of products that would be subject only to a zero tariff in intrazonal trade in 1998 and 1999. The adaptation regime for intrazonal trade ended in January 1998 for Argentina and Brazil and in January 1999 for Paraguay and Uruguay. 29. What are nontariff barriers? They are nontax legal provisions whose main objective is to limit imports by a country (import quotas or prior authorization requirement, for instance). 30. What are nontariff measures? They are legal provisions whose chief objective is to impose technical control on imports by a country. Although their side effect is to limit imports, nontariff measures aim at quite different targets (health, security, environmental protection). The main nontariff measures are sanitary and phytosanitary controls (control of sanitary conditions of products of animal and plant origin). 31. What is a regime of origin? Its a mechanism devised to determine whether a product originates in a country (or region, as in the case of Mercosur). Mercosur's Regime of Origin adopts the following basic rule: any product with at least 60 percent of regional aggregate value is considered as originating in the region. 32. Will Mercosur ever have a common currency The objective of establishing a common currency for Mercosur is still remote. But there has been significant progress in the exercise of macroeconomic coordination among the four member countries, which is essential for anhy currency unification policy. |
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